The PRC Ministry of Human Resources & Social Security Released the Draft Provisions on the Redundancy by Enterprises

Transcription

1 PRC Labor and Employment Law Newsflash (January 2015) The PRC Ministry of Human Resources & Social Security Released the Draft Provisions on the Redundancy by Enterprises In order to regulate the enterprises' redundancy and protect the legitimate rights and interests of employees and enterprises, the Ministry of Human Resources & Social Security has released the Draft Provisions on the Redundancy by Enterprises (Draft) in accordance with the PRC Employment Contract Law (ECL) and solicited comments from the public from 31 December 2014 to 31 January The Provisions on the Redundancy for Economic Reasons by Enterprises issued on 14 November 1994 by the former Ministry of Labor (Lao Bu Fa [1994] No.447) shall be simultaneously repealed after the Draft comes into force. The Draft regulates the procedures for redundancy and strengthens the protection of the employees rights and interests by setting substantive and procedural provisions, it also provides subsidy to encourage enterprises to take measures for no or less redundancy. 1 We introduce the key provisions of the Draft to the readers as follows. 1. Scope of Application The Draft particularly specifies that it applies to the branch of an enterprise, which has obtained its business license in accordance with the law, when it lays off the employees having signed employment contracts with it in accordance with Paragraph 1 of Article 41 of ECL.(Article 3) 2. Measures for No or Less Redundancy When an enterprise lays off its employees according to the Draft,the enterprise may negotiate with the trade union or employee representatives before the redundancy and take measures for no or less redundancy to the maximum extent possible. Where an enterprise's employees become incompetent for their positions due to the reasons that the enterprise is changing the line of production, implementing significant technical reforms or adjusting its operating methods 1 There may be further revisions to the Draft after the public comment solicitation period. We will follow up the related updates, and issue another newsflash on this topic as soon as more information is available.

2 or any other similar circumstances, the enterprise may take job-transfer training, skills upgrading training and other similar measures to encourage employees to improve or convert their skills to meet the positions requirements so as to reduce the redundancy. Where an enterprise is undergoing restructuring pursuant to the provisions of the Enterprise Bankruptcy Law or is faced with serious difficulties in production and operation of the enterprise and major change in other objective economic circumstances, resulting in that the employment contracts can no longer be performed, the enterprise, after reaching a consensus with the trade union or employee representatives through negotiation, may take measures including limited-time on-the-job training, reduction of working hours, adjustment of wages and job rotation or any other similar measures to reduce the redundancy.(article 5) For enterprises that have taken effective measures for no or less redundancy and maintained stable employment positions, the departments of human resources & social security shall offer employment stability subsidies in accordance with the relevant state provisions, which are used for the employees' living subsidies, contribution of social insurance premiums, job-transfer training, skills upgrading training and any other related expenses. The departments of human resources & social security shall provide guidance and service for the qualified enterprises to apply for the relevant supporting policies.(article 6) 3. Procedures of Redundancy The Draft clarifies that where an enterprise still needs to lay off employees after taking the measures stated in Paragraph 2 above, it shall make the following explanations to the trade union or to all employees 30 days in advance: the occurrence and reason of the specific circumstances as provided in Paragraph 1 of Article 41 of ECL, with information about the production and operation situations or the relevant evidences provided; the degree and scope of the impact (such as departments and positions) of the said circumstances on the production and operation of the enterprise; and the measures that have been taken for less redundancy by the enterprise. (Article 7) An enterprise, after it has made the explanations to the trade union or all the employees, shall provide a preliminary redundancy plan, which shall include the following contents: the statutory circumstances for redundancy; the scope, quantity and proportion of redundancy; the criteria for selecting employees to be laid off; the time and implementation steps of redundancy; and the compensation method and criteria for the employees to be laid off.

3 (Article 8) An enterprise shall consider the reasonable opinions of the trade union or employees on the preliminary redundancy plan, then revise and improve the plan accordingly, after which it shall finalize and publicize the redundancy plan and the name list of the employees to be laid off. (Article 9) Where an enterprise fails to explain to the trade union or all the employees 30 days in advance or to listen to the opinions of the trade union or employees, the trade union or employees are entitled to request the enterprise to go through the procedures again. (Article 10) An enterprise, after finalizing its redundancy plan, shall submit to the local administrative department of human resources & social security bureau a written redundancy report, which includes the following documents: the redundancy plan; the name list of layoff according to the redundancy plan; the materials related to prior explanation, progress of seeking opinions from the trade union or employees, specific opinions given by the trade union or employees and other materials required; whether the laid-off employees' wages, severances and social insurance premiums will be paid fully and on time, as well as corresponding handling measures or plans; the measures that have been taken for less redundancy and employment stability; and other matters to be reported as required by the local administrative department of human resources & social security bureau. (Article 11) The Draft clarifies that where an enterprise encounters any of the circumstances of redundancy as provided in ECL and the number of the employees whose employment contracts are terminated through mutual consent reaches 20 or more, the enterprise shall notify its trade union or all employees of the related information 30 days in advance and report the number of employees to be terminated to the local administrative department of human resources & social security bureau at the same time. (Article 18) 4. Protection of Rights and Interests of Employees An enterprise shall pay severances to the employees who are laid off upon the termination of their employment contracts, settle their wages in arrears in currency on time, contribute the outstanding social insurance premiums in a timely manner. (Article 13) The Draft expands the priority scope of employees to be retained by including survivors of martyrs, retired soldiers received by the enterprise, and other person specified in laws and administrative regulations. (Article 15) 5. Legal Liability

4 Where an enterprise falls under any of the following circumstances, and if it refuses to make corrections according to the rectification order of the labor administration authority or refuses to perform the administrative penalty decisions issued by the labor administration authority, a fine between RMB 2,000 to RMB 20,000 shall be imposed on the enterprise: failing to submit true redundancy report materials; failing to notify its trade union or all employees of related information 30 days in advance; and failing to report the number of employees to be terminated to local administrative department of human resources & social security bureau. (Article 22) 6. Dispute Resolution Any labor dispute arising from redundancy shall be resolved in accordance with the provisions of the PRC Labor Dispute Mediation and Arbitration Law and the relevant laws, regulations and rules. (Article 23) This newsflash was prepared by the Employment Law Team of EY Chen & Co. Law Firm, including Jane Dong, Annie Li, Nora Wang, Sharon Gong, Freda Xing, Jay Yuan and Daisy Wang.. We hope our information is helpful. If you have any inquiries, please contact: Jane Dong Annie Li Nora Wang Sharon Gong dongj@chenandco.com huiping.li@chenandco.com jie.wang@chenandco.com shiheng.gong@chenandco.com 51/F, Shanghai World Financial Center, 100 Century Avenue, Pudong New District, Shanghai , China Direct: / Tel: Fax: EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a

5 UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. EY Chen & Co. Law Firm is a premier Chinese law firm, experienced in capital market, investment, merger & acquisition, anti-trust, banking, trust, fund and compliance legal services. Our Law practitioners work closely with EY Assurance, Tax, Transactions and Advisory professionals to provide integrated, commercially focused advice that addresses your needs and helps your businesses to thrive in different markets, with the aim of reducing legal and other risks. (2015)EY Chen & Co. Law Firm Member of Ernst & Young Global Limited All Rights Reserved. APAC no. ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as law, accounting, tax, or other professional advice. Please refer to your advisors for specific advice.